October 14: All that glitters or, Adam Smith, fixed.

I bet when he woke up that morning he wasn't thinking, "My bald spot is going to be on the wire services today."

I can't find my copy of "The Essential Galbraith," because this is surely a J.K. Galbraith moment, but Adam Smith, today writing about colonization, is less ostentatiously snarky so maybe it's better:

In consequence of the representations of Columbus, the council of Castile determined to take possession of countries of which the inhabitants were plainly incapable of defending themselves. The pious purpose of converting them to Christianity sanctified the injustice of the project. But the hope of finding treasures of gold there, was the sole motive which prompted to undertake it[.]

Emphasis added because we have less time to discover snark in our busy age. The other day I saw mixed motives in the New World project -- Adam Smith sees more clearly than I do and knows that the Bible is just a fig leaf, if you will, or maybe "justification by justification."

The rest of the reading is even better, and, to save you time, I'm going to edit a highlight so you don't have to:

Of all those expensive and uncertain projects, however, which bring bankruptcy upon the greater part of the people who engage in them, there is none perhaps more perfectly ruinous than the search after new silver and gold mines financial securities. It is perhaps the most disadvantageous lottery in the world, or the one in which the gain of those who draw the prizes bears the least proportion to the loss of those who draw the blanks; for though the prizes are few and the blanks many, the common price of a ticket is the whole fortune of a very rich man... They are the projects, therefore, to which of all others a prudent law-giver, who desired to increase the capital of his nation, would least chuse to give any extraordinary encouragement...

Such in reality is the absurd confidence which almost all men have in their own good fortune, that wherever there is the least probability of success, too great a share of it is apt to go to them of its own accord on CNBC. But though the judgment of sober reason and experience concerning such projects has always been extremely unfavourable, that of human avidity has commonly been quite otherwise. The same passion which has suggested to so many people the absurd idea of the philosopher’s stone Laffer Curve, has suggested to others the equally absurd one of immense rich mines of gold and silver nonstop rises in the real-estate market.

The classics are still relevant!

September 11: Adam Smith Breaks It Down For You

For more on people wearing barrels, please see this Onion

Wodehouse, whom, of course, I adore, was a master at bringing off the same effect again and again, but he was so good at it that it worked every time. It's like Mariano Rivera's cutter: you know he's going to throw it, but you're still helpless.

Adam Smith complete lack of affect, his utter refusal to take sides, I also find devastating. Check this passage out, about wage-slave/boss disputes:

It is not, however, difficult to foresee which of the two parties must, upon all ordinary occasions, have the advantage in the dispute, and force the other into a compliance with their terms. The masters, being fewer in number, can combine much more easily; and the law, besides, authorises, or at least does not prohibit their combinations, while it prohibits those of the workmen. We have no acts of parliament against combining to lower the price of work; but many against combining to raise it. In all such disputes the masters can hold out much longer....Many workmen could not subsist a week, few could subsist a month, and scarce any a year without employment. In the long-run the workman may be as necessary to his master as his master is to him; but the necessity is not so immediate.

I find this totally bleak, but in Smith's refusal to put his thumb on the scales of this dispute -- his utter Olympian distance -- makes it even bleaker. Oh, speaking of bleak:

...the lowest species of common labourers must every where earn at least double their own maintenance, in order that one with another they may be enabled to bring up two children; the labour of the wife, on account of her necessary attendance on the children, being supposed no more than sufficient to provide for herself. But one-half the children born, it is computed, die before the age of manhood. The poorest labourers, therefore, according to this account, must, one with another, attempt to rear at least four children, in order that two may have an equal chance of living to that age.

I find this incredibly sad, but I think I would find it less so if it were written to make me sad. Maybe it's because Smith is concerned with the calculation of the laborer -- so we're less outside his hovel, having pity on him; rather, we're inside figuring out what we do when one of the kids dies of cholera.

You know where things aren't so sad? America:

Labour is there so well rewarded that a numerous family of children, instead of being a burthen is a source of opulence and prosperity to the parents. The labour of each child, before it can leave their house, is computed to be worth a hundred pounds clear gain to them. A young widow with four or five young children, who, among the middling or inferior ranks of people in Europe, would have so little chance for a second husband, is there frequently courted as a sort of fortune.

Was this really true? I suppose there were tons of widows. It occurs to me that Adam Smith is not only one of the founders of economics, the study of the Wealth of Nations and so forth, but also the founder of Freakonomics, the study of why men like widows and which ones.

June 5: Against landlords and squirrels

The target The enemy

The first thing I want to point out about this reading is that, if you're juvenile like me, seeing the phrase "butcher's-meat" about 10 times in the space of a page makes you smile.

The second thing I want to point out is that disciples of Adam Smith, such as people who write for the Wall Street Journal, like to lionize the captains of industry as the most productive members of society, the men and occasional token woman who endow us with the highest standard of living, etc. etc. Well, they are that -- maybe (although if they're the most productive members of society, how come they can't clean their own offices?) but, as their hero Prof. Smith points out, they are also dicks:

In adjusting the terms of the lease, the landlord endeavours to leave him no greater share of the produce than what is sufficient to keep up the stock from which he furnishes the seed, pays the labour, and purchases and maintains the cattle and other instruments of husbandry, together with the ordinary profits of farming stock in the neighbourhood. This is evidently the smallest share with which the tenant can content himself without being a loser, and the landlord seldom means to leave him any more.

The most boring part of science/social-science writing for the non-scientist/social-scientist is the fact that you have to be walked through all the first principles before you get to where the action is. Adam Smith is a sufficiently good writer, with the occasional waspish sting, that you can stand the walk-through:

The rent of land, it may be thought, is frequently no more than a reasonable profit or interest for the stock laid out by the landlord upon its improvement. This, no doubt, may be partly the case upon some occasions [emphasis added]; for it can scarce ever be more than partly the case. The landlord demands a rent even for unimproved land, and the supposed interest or profit upon the expence of improvement is generally an addition to this original rent. Those improvements, besides, are not always made by the stock of the landlord, but sometimes by that of the tenant. When the lease comes to be renewed, however, the landlord commonly demands the same augmentation of rent, as if they had been all made by his own.

See? Landlords are dicks. But, if you ever rented, you probably knew that.

My "however" part of the post, however, is that I couldn't tell you what the point of this reading was unless I flip back to it. Something about rent, probably, and how the rent you get for turning land out for pasture is controlled by the how much you'd get if you grew corn (= "wheat" in American English, just like "lorry" = "maize"). Maybe I can't remember because I'm too entranced with the anti-landlord stuff. But maybe it's also not my fault. I pad into the other room (my shoes are off) and there pull out my best-of Galbraith, who says, "As a writer Smith was a superb carpenter but a poor architect. The facts appear in lengthy digressions which have been criticized as such." And then he adds, "But for any discriminating reader it is worth the interruption."

And it's true: if you can hang in with the 18th-century-ness of it all, you get a little discussion about whether you should build a wall around your kitchen garden (the ancients did not think so, but "in Great Britain, and some other northern countries, the finer fruits cannot be brought to perfection but by the assistance of a wall.")

Of course, Smith could not have known that, in our time, there would be a dwarf peach tree in California from which we have gotten one (1) ripe peach in seven years because of the fucking squirrels. Perhaps he wasn't as far-seeing as he is often given credit for.

May 24: A Thought From Adam Smith

Emphasis is added because Adam Smith never shouts and I like to:

The word VALUE, it is to be observed, has two different meanings, and sometimes expresses the utility of some particular object, and sometimes the power of purchasing other goods which the possession of that object conveys. The one may be called “value in use;” the other, “value in exchange.” The things which have the greatest value in use have frequently little or no value in exchange; and on the contrary, those which have the greatest value in exchange have frequently little or no value in use.

An SUV would be a perfect example of this. It is also a good thought for Memorial Day, where we commemorate those who exchanged their lives, often for reasons that were less than strictly economic.

Mar 28: In defense of the lazy

Another undoubted classic today, The Wealth Of Nations. And not just any part, but the classic part of the classic -- the classic sirloin, if you will -- the part about pins and the division of labor. (Which doesn't have my favorite Smith quote: "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.")

This is pretty famous, and unimpeachable, so I only want to point out two passages that are offensive to a lazy man such as myself. The first one is where Smith is talking about how the division of labor keeps workmen from doing more than one task:

A man commonly saunters a little in turning his hand from one sort of employment to another. When he first begins the new work he is seldom very keen and hearty; his mind, as they say, does not go to it, and for some time he rather trifles than applies to good purpose. The habit of sauntering and of indolent careless application, which is naturally, or rather necessarily acquired by every country workman who is obliged to change his work and his tools every half hour, and to apply his hand in twenty different ways almost every day of his life; renders him almost always slothful and lazy, and incapable of any vigorous application even on the most pressing occasions.

I bolded the "necessarily" to point out the one excuse Smith will give workmen -- they can't help being shiftless, it's just that they haven't been maximized. I speak up for them, however, having done some boring repetitive work among the chicken carcasses in the past. You need to gab.

And when I advanced to the writing rooms of the major studios, where all us writers made princely sums, we had to gab and saunter and trifle before we could buckle down to the work which the free market said was extremely valuable.

The other little passage is right at the end:

...and yet it may be true, perhaps, that the accommodation of an European prince does no always so much exceed that of an industrious and frugal peasant, as the accommodation of the latter exceeds that of many an African king, the absolute master of the lives and liberties of ten thousand naked savages.

The peasant may indeed be accommodated better than the king, but the peasant has to be industrious and frugal. The king does not.